Mind the gap

New figures from several sources show Scotland, Yorkshire and the North East of England falling further behind the South in the private sector stakes.

While many employers are reportedly toasting their optimism with a dose of southern comfort this quarter, their counterparts north of Sheffield appear to be stuck in a proverbial peat bog, unable to gain a foothold on terra firma.

“UK jobs market defies gravity,” claimed the latest employment outlook survey from Manpower this morning in a report which champions the South of England, finance and utility sectors and big firms in general for leading the way in hiring.

A 1% national rise in the number of employers looking to hire workers in the coming quarter is hardly cause to get the still-damp bunting out and celebrate the end of the dark days.

Perhaps the 12% increase in optimism in the East Midlands and the 5% rise across the entire southern reaches of England (except London which had a 3% rise) is more worthy of a celebratory pat on the back.

But in Scotland, Yorkshire and the North East of England, we are apparently slipping further behind the south. Scotland, says Manpower, has seen the hiring intentions of its employers drop from zero in Q2 2012 to -6% in the third quarter – meaning job losses rather than job creation. Diageo’s plans to create and safeguard 1,000 jobs in Scotland, which were announced this week, come as welcome respite amid the gloom.

Cross the border into the North East, in which manufacturing bodies are still reeling from the news of BAE’s closure of an historic tank factory in Newcastle, the picture is worse, with a quarter-to-quarter plunge from 0 to -7% in hiring intentions. Yorkshire too is reportedly moving backwards, slipping from 1% to –2% in the same period.

“The old North-South divide appears to be rearing its head,” Manpower warned.

UK managing director Mark Cahill added: “When you’re going head to head with a return to recession at home and a burgeoning eurozone crisis, by rights the jobs market should be in free fall - but that’s not what we’re seeing. Firms are still looking to hire albeit at a weaker pace than before but the sort of hiring that is going on is where you’d least expect it.

“Take the finance and business services sector for example, which is +13%. We’ve all heard about banks shedding thousands of jobs, but the banks are also hiring thousands of temporary workers to deal with the fallout from the miss-selling of PPI.”

Given that Manpower questioned just 2,100 firms across the entire UK, the figures can of course be taken with a pinch of salt. But there is further evidence of the gap widening between North and South. Yesterday the think-tank, IPPR, said that the double-dip recession has hit the North hard, with unemployment rising and business confidence falling.

This lack of confidence among employers, it said, has maintained the hiring freeze across the North, implying that upward pressure on unemployment is likely to continue for the rest of the year.

“The unwillingness of employers to take on permanent staff can only increase economic insecurity of households and consumer confidence, threatening a vicious circle of low demand,” its report said. “There is evidence that unlike the 2008/09 recession, the double-dip recession this year has differentially affected different areas in the North, with the net effect likely to be an increase in inequality within the North.”

In fact, only Yorkshire and Humber region has managed to keep its head above water in the North, the IPPR said, recording both decreases in unemployment and a Purchasing Managers Index score around the national average for output growth in the last three months, with new business continuing to increase. An additional report from KPMG this week claims that the North of England jobs market saw the slowest rise in permanent positions for 10 months in May with fewer temporary positions. The report shows the number of people looking for work in the North rose for the 14th consecutive month. The number hunting temporary jobs increased for the 21st month.

So Clearly the size and permanency of the North-south gap remains up for debate, but its existence is unquestioned and the need for action is certainly pressing.

The IPPR recommends a number of measures, including transport upgrades and a targeted jobs guarantee.

“The Government should offer a guaranteed job, paid at the minimum wage or above, to anyone who has been unemployed and claiming JSA for more than 12 consecutive months, the think-tank says.

“The guarantee should be matched by an obligation to take up the offer or to find an alternative that does not involve claiming JSA. This guarantee could be applied on a targeted basis: that is, in the form of a targeted jobs guarantee, for all people living in areas where the job density ratio is twice the national average.”

With one in five under-25s in the North of the UK classed as not in education, employment or training (NEETs) – compared to 14% and 12% in the South West and South East respectively – a longer term view is also needed, the IPPR says.

IPPR spokesman Ed Cox warned that current initiatives are not far reaching enough to handle surge in the NEET level when schools and universities turn out this summer. “There needs to be a joint effort to prevent a big spike in NEETs numbers,” he said. “Schools need to encourage students to stay on where they can, colleges need to make extra efforts to recruit next year’s intake and public sector employers need to promote work experience schemes. But, above all, employers need to take on apprentices through the various schemes now available.”